Shutdown means it's time to invest in USA

 

Simon Read
Friday 04 October 2013 20:10 BST
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Far from being cause for concern, experts say the US government shutdown offers investment opportunities
Far from being cause for concern, experts say the US government shutdown offers investment opportunities (AFP/Getty Images)

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The political deadlock in Congress as President Obama attempts to get financial support for his national healthcare plan led this week to the first shutdown of US government services for 17 years.

At the moment around 800,000 federal employees have been sent home on unpaid leave.

But far from being cause for concern, investment experts say that the country's problems have created a buying opportunity.

Fidelity's Trevor Greetham said: "The dispute has the power to depress economic activity temporarily and it will play havoc with the economic release calendar.

"But the US is four years into a steady, self-sustaining recovery and the Federal Reserve stands ready to offset any marginal fiscal tightening that may come out of the negotiations.

"When the smoke clears we will see a global expansion that is strengthening and broadening with monetary policy set to stay loose in every major economy.

"An equity-friendly backdrop," Mr Greetham added.

The situation will come to a head by 17 October, when the US will have to extend its so-called debt ceiling. "The likely outcome is a compromise of some sort when the brinkmanship finally gives way to the reality of the situation and how ridiculous Congress is behaving," said Rowan Dartington Signature's Guy Stephens.

"Brace yourself as the drama unfolds but look out for buying opportunities."

BlackRock's Russ Koesterich agreed: "While some have become more defensive in this environment, for those with longer time horizons this volatility could represent a buying opportunity."

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